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Dorgan looks to ban "naked" credit default swaps

Sen. Byron Dorgan (D-N.D.) said Monday he will introduce legislation banning part of the multitrillion-dollar market for financial derivatives.

Dorgan said he will offer an amendment to the broad financial overhaul package, now pending in the Senate, that would prohibit "naked" credit defaults swaps.

The market for credit default swaps has been widely blamed for exacerbating the financial crisis. Credit default swaps are derivatives tied the potential for default of an underlying asset. A "naked" swap is one in which the parties do not hold a stake in the underlying asset.

"I'm interested in offering an amendment that bans naked credit default swaps. You know what a naked credit swap is? That's one that has no insurable interest on either side. It's just flat out betting rather than investing," Dorgan said.